16/06/2020 - Agriculture

IAS Parliament 4 years

KEY POINTS

· The pre-APMCs days were dominated by misinformation and price arbitrage. Traders with better communications between themselvesthose were the days when telephones were a luxury, and long distance calls rarely materialised—got a sense of prevailing prices and used this information to their advantage.

· APMCs were thought to be the answer to these problems. Institutional and physical infrastructure were set up to ensure that all farm produce was brought to the designated markets, traders with licences were allowed to participate in auctions of graded produce and timely payments were made.

· Market yards and market committees were set up at the district and sub-district levels. These changed the market dynamics (at least, partially) in favour of the farmers in the early days.

· APMCs were democratic institutions managed by a board/committee of mostly elected members from among the farmers and traders. The state governments, obsessed with revenue collection, found it convenient to supersede these boards and appoint administrators for long periods of time. Over time, they ceased to represent farmers’ interests.

· Set up with good intentions, like democratically managed committees, good infrastructure for auctions and storage, price discovery and communication, the system somehow deteriorated into a cartelised operation (licensing becoming the tool); cess collection became an obsession, and price discovery and transparency were put in the cold store. A

· The ordinance carves out a new space called ‘trade area’, which includes everything except the market yards operated by APMCs and private mandis. All space other than these is a ‘trade area’ including farm gates, silos, factory premises, etc. This gives the farmer three choices, APMC, private market yard or a trade area. The big game-changer is that no market fee or cess is leviable in the trade area. A clear price advantage!

· The central government has retained with itself the power to give licences to traders who can operate in this new area, ostensibly to protect the farmers. It has the powers to prescribe the modalities of the transaction to ensure payment to farmers on time. Enforcement of this could see the birth of a new set of inspectors.

· There is a dispute settlement mechanism for disputes with farmers under the SDO, and an appeal mechanism under the district collector. While these provisions are useful, farmers will be loth to use them since most of them would rather settle than litigate. New electronic trading platforms are also allowed to be set up in these areas by private individuals, FPOs and co-ops.